Service Charges

The term service charge covers all charges and fees made by a bank to their customers. The term often relates to charges in respect of charges made for a transaction and related activities. These charges may take many forms, including:

interest in respect of overdrafts (whether authorised or unauthorised by the bank)

charges for exceeding authorised overdraft limits, or making payments (or attempting to make payments) where no authorised overdraft exists

Why do banks charge service fees?

To make a profit and pay operating expenses, banks typically charge for the services they provide. When a bank lends you money, it charges interest on the loan. When you open a deposit account (checking or savings) there are fees for that as well. Even fee-free checking and savings accounts have some fees.